Earl Howe's speech at the 2012 ABPI Annual Conference dinner

The National Health Service is our most treasured of national institutions and the relationship it enjoys with the life sciences industry has been, and remains, a very strong one.

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By working closely together, we have achieved a great deal. Throughout the last century, and long before that, British science was at the forefront of medical advance. Around a fifth of the world's top medicines were discovered and developed in Britain – more than almost any other country.

But no country can live forever on the glories of its past. What we achieved in the 20th century, we must surpass in the 21st.

This Government is determined to do whatever is necessary to enable world class scientific advances to continue to be made in the UK. We want companies to research and develop new drugs and new technologies that will benefit patients and shareholders alike for decades to come.

As we all know, modern business is about collaboration between international partners. It’s about bringing to fruition the very best of what each member of the partnership can offer. In holding to that idea, we can make the UK the first choice for life sciences investment, and a strong base from which to export.

The 'Plan for Growth', which we published last autumn addresses a variety of issues including health research, procurement, social care and the uptake of assistive technologies.

And our ‘Strategy for UK Life Sciences’, launched in December, will help create an environment and an infrastructure that supports pioneering researchers and clinicians to bring innovation to market earlier and more easily.

It is a strategy for the next 10–15 years; it builds the actions of the Growth Review and reaches beyond it.

And it quite consciously tries to think out of the box. It contains a specific commitment to conduct a public consultation on an Earlier Access Scheme, with the aim of making promising new medicines available in the UK before they are licensed under EU rules.

The idea is for data to be submitted by a company to the Medicines and Healthcare Products Regulatory Agency (MHRA) and the MHRA would give an opinion as to whether the benefits of a drug appear to outweigh the risks, and that opinion would inform clinicians in deciding on treatment options with their patients.

Initially the scheme would be limited. Anything that addresses the way drugs are developed will need a very wide buy in – especially if changes to current EU legislation are needed.

In fact, several UK and EU initiatives are looking at this issue of “adaptive licensing” and we will participate fully in this wider debate.

One commitment in the strategy is to bring together experts from Government, the NHS, industry, academia and the third sector to debate healthcare regulation. This offers a genuine opportunity to explore some big ideas in detail.

I am looking forward to hearing what this group says – in particular on how exciting scientific advances can more quickly be translated into effective treatments for patients.

I want the UK to be the very best place in Europe to start, finance and grow a business supported by the most competitive tax system in the G20.

We’ve made a start by cutting corporation tax. By 2014, our rate of corporation tax at 22% will be dramatically lower than our competitors.

8% below Germany

2% below France

and 18% lower than the US.

An advertisement for investment and jobs in Britain.

Alongside this, there will be the Patent Box, offering a 10% rate of corporation tax on profits from patents. A clear statement that invention and enterprise are welcome in the UK.

But this is only half the story. The most important thing is to translate these benefits into benefits for patients.

Last August, our National Institute for Health Research announced the results of our latest £800 million open competition for biomedical research, developing ground breaking medicines, treatments and care for patients.

Last month we launched the Clinical Practice Research Datalink, giving researchers at home and around the world access to anonymised NHS patient data. As it develops further, it will enable health research and support improvements to the health and wealth of the nation.

We are also committed to streamlining regulation and improving the cost effectiveness of clinical trials.

The UK has a reputation for having a highly skilled workforce. We are working with the sector skills council, Cogent, to ensure that this continues to be the case and that the life sciences can continue to draw upon the most talented people.

We offer considerable support for research manufacturing across the piece – from training to help with manufacturing and engineering excellence, from R&D tax credits to UK Trade and Investment’s business development services. I do encourage all of you to take full advantage of the support on offer.

Branded medicines

Let me now turn to the pricing of branded medicines. First, I’d like to thank you for your support and engagement in our work to develop the new medicines pricing arrangements, including value-based pricing. We want value-based pricing (VBP) – and the successor to the Pharmaceutical Price Regulation Scheme (PPRS) – to be agreed with industry.

I understand that the ABPI is currently consulting with companies and I will be very interested to hear of any early emerging messages and issues.

Whilst we do not yet have a specific start date for the negotiations in mind, our working assumption is for discussions to begin in the second half of the year.

I should stress that, because it will apply primarily to new medicines, VBP will build up slowly, with the majority of branded medicines falling under the successor of PPRS.

While there is much to be agreed, I think it would be helpful for me to confirm the areas where we have clarity.

We share a common goal for any new pricing arrangements to be stable and sustainable. Concerns have been raised about whether value-based pricing might imply a higher burden of regulation. I believe these fears to be misplaced as we most certainly do not intend to introduce a system that is bureaucratic and burdensome.

We want to improve the assessment of new medicines, ensuring transparent, predictable and timely decision-making. I emphasise that I am talking here about the transparency and predictability of the system. By streamlining pricing and assessment processes into one, we can make the system more transparent and simpler to navigate. Companies can then be more confident about the prices their products are likely to achieve.

With a greater degree of predictability, companies will also be able to focus their research on the treatments that society values most.

We are determined to create a system that gives patients better access to the most effective medicines, at prices that deliver value to the NHS.

If we get this right, then more of your innovative and effective new medicines will be used in the NHS, because clinicians will be confident that the NHS is paying a price that properly reflects their value to society.

We are committed to maintaining the funding for NICE-recommended indications and replicating this for medicines with a value-based price.

This will be supported across the NHS by implementing the proposals in David Nicholson Report, ‘Innovation, Health and Wealth’. This report is about making sure that patients get the highest quality care – even during times of financial constraints.

It requires a change in culture so that staff have the right knowledge and skills.

It means working collaboratively with all those who have an interest in healthcare, whether from industry, academia or the scientific community.

It means aligning strategic priorities, with compelling evidence, with leadership and with staff engagement.

And it means empowering patients to make informed choices, driving change through their actions.

The report sets out what we must do to achieve this and to make the spread of innovation central to all that we do.

The actions are designed to achieve a systematic change in the way the NHS operates. It sets an ambition for the NHS: a commitment to innovation; support for research; and the rapid adoption of the best, most transformative, most innovative ideas, products and services.

And in these days of tighter budgets, we clearly need to use our resources wisely, optimising the use of both existing and new technologies. The emerging NHS Commissioning Board will be thinking about how it can support the public and professionals to get even better outcomes; and the pharmaceutical industry has an important role to play by supporting it in this work.

Let’s remember, despite the difficulties we have faced in recent years, the openness and flexibility of the UK economy have allowed us to grow faster than any other G7 economy.

Our strengths remain: an open business environment, a gateway of international connections, a strong academic research base and an abundance of creative talent.

We are determined to do whatever we need to do to ensure continued progress and prosperity for generations to come.

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